Avantax 8K Blucora Announces First Quarter 2021 Results | AVTA 5 May 21

Exhibit 99.2

Blucora, Inc.

Supplemental Information

March 31, 2021

Table of Contents


Financial Information
Consolidated Statements of Operations (Unaudited)			2
Consolidated Financial Results (Unaudited)			3
Reconciliation of Certain Non-GAAP Financial Measure to the Nearest Applicable GAAP Measures			5
Net Leverage Ratio			7
Reconciliation of Operating Free Cash Flow			8

Operating Metrics
Wealth Management			9
Tax Software (1)

____________________________

(1)Quantitative information on the number of consumer e-files, professional tax software e-files, professional units sold, and professional e-files per unit sold has been excluded from the Supplemental Information this quarter because we do not view the comparison of these metrics to prior quarters as meaningful in light of the extension of the filing and payment deadline for tax year 2020 federal tax returns from April 15, 2021 to May 17, 2021, as well as the extension of the federal filing and payment deadlines to mid-June for Texas, Louisiana, and Oklahoma.

Blucora Consolidated Statements of Operations (Unaudited)


(in thousands except %s and per share amounts, rounding differences may exist)	2019		2020										2021
	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q
Segment revenue:
Wealth Management	$	507,979	$	144,989	$	115,884	$	135,932	$	149,384	$	546,189	$	154,491
Tax Software	209,966		118,331		45,238		39,421		5,773		208,763		123,892
Total segment revenue	717,945		263,320		161,122		175,353		155,157		754,952		278,383
Operating expenses:
Cost of revenue:
Wealth Management	352,081		102,342		83,868		96,122		103,630		385,962		108,623
Tax Software	10,691		4,013		3,054		2,692		2,569		12,328		5,578

Total segment cost of revenue	362,772		106,355		86,922		98,814		106,199		398,290		114,201
Engineering and technology	30,931		8,515		7,377		6,007		5,359		27,258		7,128
Sales and marketing	126,205		79,710		40,057		31,018		26,833		177,618		77,562
General and administrative	78,529		24,728		20,200		18,605		18,625		82,158		24,685
Depreciation	5,479		1,796		1,675		1,874		1,948		7,293		2,300
Amortization of other acquired intangible assets	37,357		7,748		6,673		7,746		7,578		29,745		7,175
Impairment of goodwill and an intangible asset (1)	50,900		270,625		—		—		—		270,625		—
Acquisition and integration	25,763		5,682		2,824		10,276		12,303		31,085		8,103

Total operating expenses	717,936		505,159		165,728		174,340		178,845		1,024,072		241,154
Operating income (loss)	9		(241,839)		(4,606)		1,013		(23,688)		(269,120)		37,229
Other loss, net	(16,915)		(6,135)		(5,288)		(11,963)		(7,918)		(31,304)		(7,883)
Income (loss) before income taxes	(16,906)		(247,974)		(9,894)		(10,950)		(31,606)		(300,424)		29,346
Income tax benefit (expense)	65,054		(67,520)		59,539		(15,256)		(19,094)		(42,331)		(1,700)

Net income (loss)	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)	$	27,646
Net income (loss) per share
Basic	$	1.00	$	(6.60)	$	1.04	$	(0.55)	$	(1.05)	$	(7.14)	$	0.57
Diluted	$	0.98	$	(6.60)	$	1.03	$	(0.55)	$	(1.05)	$	(7.14)	$	0.56
Weighted average shares outstanding:
Basic	48,264		47,827		47,941		48,039		48,107		47,978		48,261
Diluted	49,282		47,827		48,092		48,039		48,107		47,978		49,097

____________________________

(1)In the first quarter of 2020, we recognized a $270.6 million goodwill impairment related to our Wealth Management reporting unit. In the third quarter of 2019, we recognized a $50.9 million impairment of an intangible asset related to the HD Vest trade name intangible asset.

Blucora Consolidated Financial Results (Unaudited) (1)


(in thousands except %s and per share amounts, rounding differences may exist)	2019			2020															2021
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
Segment revenue:
Wealth Management (1)	$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189		$	154,491
Tax Software (2)	209,966			118,331			45,238			39,421			5,773			208,763			123,892
Total segment revenue	$	717,945		$	263,320		$	161,122		$	175,353		$	155,157		$	754,952		$	278,383
Segment operating income: (3)
Wealth Management (1)	$	68,292		$	22,598		$	11,731		$	17,498		$	20,368		$	72,195		$	19,396
Tax Software (2)	96,249			37,753			6,659			16,234			(11,025)			49,621			50,888
Total segment operating income	$	164,541		$	60,351		$	18,390		$	33,732		$	9,343		$	121,816		$	70,284
Segment operating income % of revenue:
Wealth Management (1)	13		%	16		%	10		%	13		%	14		%	13		%	13		%
Tax Software (2)	46		%	32		%	15		%	41		%	(191)		%	24		%	41		%
Total segment operating income % of revenue	23		%	23		%	11		%	19		%	6		%	16		%	25		%
Unallocated corporate-level general and administrative expenses (3)	$	27,361		$	7,016		$	5,810		$	6,745		$	7,118		$	26,689		$	5,694
Adjusted EBITDA (4)	$	137,180		$	53,335		$	12,580		$	26,987		$	2,225		$	95,127		$	64,590
Other unallocated corporate-level operating expenses: (3)
Stock-based compensation	$	16,300		$	(1,201)		$	3,904		$	4,517		$	2,846		$	10,066		$	5,610
Acquisition and integration—Excl. change in fair value of acquisition-related contingent consideration	25,763			5,682			2,824			11,276			3,003			22,785			1,803
Acquisition and integration—Change in fair value of acquisition-related contingent consideration	—			—			—			(1,000)			9,300			8,300			6,300
Depreciation	6,851			2,420			2,412			2,620			2,710			10,162			3,243
Amortization of acquired intangible assets	37,357			7,748			6,673			7,746			7,578			29,745			7,175
Executive transition costs	—			9,184			636			405			476			10,701			—
Headquarters relocation costs	—			716			737			410			—			1,863			—
Contested proxy and other legal and consulting costs	—			—			—			—			—			—			3,230
Impairment of goodwill and intangible asset	50,900			270,625			—			—			—			270,625			—

Operating income (loss)	$	9		$	(241,839)		$	(4,606)		$	1,013		$	(23,688)		$	(269,120)		$	37,229
Unallocated other (income) loss, net: (3)
Interest expense	$	19,017		$	5,316		$	4,840		$	7,254		$	7,160		$	24,570		$	7,183
Amortization of debt issuance costs	1,042			313			331			362			366			1,372			363
Accretion of debt discounts	228			68			70			276			279			693			277
Total interest expense	$	20,287		$	5,697		$	5,241		$	7,892		$	7,805		$	26,635		$	7,823
Interest income	(449)			(14)			(11)			(2)			(38)			(65)			(2)

Gain on sale of a business	(3,256)			—			—			(349)			—			(349)			—
Non-capitalized debt issuance expenses	—			—			—			3,687			—			3,687			—
Other (income) loss, net	333			452			58			735			151			1,396			62
Total other loss, net	$	16,915		$	6,135		$	5,288		$	11,963		$	7,918		$	31,304		$	7,883
Income (loss) before income taxes	$	(16,906)		$	(247,974)		$	(9,894)		$	(10,950)		$	(31,606)		$	(300,424)		$	29,346
Income tax (benefit) expense:
Cash	$	3,564		$	483		$	158		$	269		$	362		$	1,272		$	1,969
Non-cash (5)	(68,618)			67,037			(59,697)			14,987			18,732			41,059			(269)
Total income tax (benefit) expense	$	(65,054)		$	67,520		$	(59,539)		$	15,256		$	19,094		$	42,331		$	1,700
GAAP net income (loss)	$	48,148		$	(315,494)		$	49,645		$	(26,206)		$	(50,700)		$	(342,755)		$	27,646


GAAP net income (loss) per share - diluted	$	0.98		$	(6.60)		$	1.03		$	(0.55)		$	(1.05)		$	(7.14)		$	0.56
Non-GAAP net income (loss) (4)	$	104,198		$	43,561		$	4,463		$	15,055		$	(8,999)		$	54,080		$	50,952
Non-GAAP net income (loss) per share - diluted (4) (6)	$	2.11		$	0.90		$	0.09		$	0.31		$	(0.19)		$	1.12		$	1.04

Basic weighted average shares outstanding	48,264			47,827			47,941			48,039			48,107			47,978			48,261
Diluted weighted average shares outstanding	49,282			47,827			48,092			48,039			48,107			47,978			49,097

Notes to Consolidated Financial Results on next page

Notes to Consolidated Financial Results

(1)The operations of 1st Global are included in the Company's operating results as part of the Wealth Management segment beginning May 6, 2019 when 1st Global was acquired. The operations of HKFS are included in the Company's operating results as part of the Wealth Management segment beginning July 1, 2020 when HKFS was acquired.

(2)As a highly seasonal business, almost all of the Tax Software revenue is typically generated in the first two quarters of the calendar year. In March 2020 and as a result of the COVID-19 pandemic, the Internal Revenue Service (the "IRS") extended the filing deadline for federal tax returns from April 15, 2020 to July 15, 2020. This filing extension resulted in the shifting of a significant portion of Tax Software segment revenue and segment income that is usually earned in the first and second quarters of 2020 to the third quarter of 2020. As a result of the continued impact of the COVID-19 pandemic, the IRS delayed the start of the 2021 tax season and extended the filing and payment deadline for tax year 2020 federal tax returns from April 15, 2021 to May 17, 2021. In addition, the IRS extended the federal filing and payment deadline for Texas, Louisiana, and Oklahoma to mid-June.We expect that these events will result in the shifting of a significant portion of Tax Software segment revenue and segment income that would typically have been expected to be earned in the first quarter of 2021 to the second quarter of 2021.

(3)We do not allocate certain general and administrative costs (including personnel and overhead costs), stock-based compensation, depreciation, amortization of acquired intangible assets, acquisition and integration costs, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, impairment of goodwill and an intangible asset, other income/loss, or income taxes to the reportable segments. General and administrative costs are included in "Unallocated corporate operating expenses."

(4)Non-GAAP measure. See Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Applicable GAAP Measures on page 5 for additional information.

(5)Amounts represent the non-cash portion of income taxes. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which consist primarily of U.S. federal net operating losses. The majority of these net operating losses will either be utilized or expire between 2021 and 2024.

(6)For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.

Blucora Reconciliation of Certain Non-GAAP Financial Measures to the Nearest Applicable GAAP Measures (1) (2)


	2019		2020										2021
(in thousands except per share amounts, rounding differences may exist)	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q
Adjusted EBITDA
Net income (loss) (1) (2)	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)	$	27,646
Stock-based compensation	16,300		(1,201)		3,904		4,517		2,846		10,066		5,610
Depreciation and amortization of acquired intangible assets	44,208		10,168		9,085		10,366		10,288		39,907		10,418
Other loss, net	16,915		6,135		5,288		11,963		7,918		31,304		7,883
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration	25,763		5,682		2,824		11,276		3,003		22,785		1,803
Acquisition and integration—Change in fair value of HKFS Contingent Consideration	—		—		—		(1,000)		9,300		8,300		6,300
Executive transition costs	—		9,184		636		405		476		10,701		—
Headquarters relocation costs	—		716		737		410		—		1,863		—
Contested proxy and other legal and consulting costs	—		—		—		—		—		—		3,230


Income tax (benefit) expense	(65,054)		67,520		(59,539)		15,256		19,094		42,331		1,700
Impairment of goodwill and an intangible asset	50,900		270,625		—		—		—		270,625		—
Adjusted EBITDA	$	137,180	$	53,335	$	12,580	$	26,987	$	2,225	$	95,127	$	64,590
Non-GAAP Net Income (Loss)
Net income (loss) (1) (2)	$	48,148	$	(315,494)	$	49,645	$	(26,206)	$	(50,700)	$	(342,755)	$	27,646
Stock-based compensation	16,300		(1,201)		3,904		4,517		2,846		10,066		5,610
Amortization of acquired intangible assets	37,357		7,748		6,673		7,746		7,578		29,745		7,175
Impairment of goodwill and an intangible asset	50,900		270,625		—		—		—		270,625		—
Gain on the sale of a business	(3,256)		—		—		(349)		—		(349)		—
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration	25,763		5,682		2,824		11,276		3,003		22,785		1,803
Acquisition and integration—Change in fair value of HKFS Contingent Consideration	—		—		—		(1,000)		9,300		8,300		6,300
Executive transition costs	—		9,184		636		405		476		10,701		—
Headquarters relocation costs	—		716		737		410		—		1,863		—
Contested proxy and other legal and consulting costs	—		—		—		—		—		—		3,230
Non-capitalized debt issuance expenses	—		—		—		3,687		—		3,687		—


Cash tax impact of adjustments to GAAP net income	(2,396)		(736)		(259)		(418)		(234)		(1,647)		(543)
Non-cash income tax (benefit) expense	(68,618)		67,037		(59,697)		14,987		18,732		41,059		(269)
Non-GAAP net income (loss)	$	104,198	$	43,561	$	4,463	$	15,055	$	(8,999)	$	54,080	$	50,952

Non-GAAP net income (loss) per share (3)	$	2.11	$	0.90	$	0.09	$	0.31	$	(0.19)	$	1.12	$	1.04
Weighted average shares outstanding (3)	49,282		48,253		48,092		48,203		48,107		48,244		49,097

Notes to Reconciliations of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures on next page

Notes to Reconciliations of Certain Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(1) We define Adjusted EBITDA as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, depreciation and amortization of acquired intangible assets, other loss, net, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, and income tax (benefit) expense. Other loss, net primarily constitutes our interest expense, net of interest income. Acquisition and integration costs relate to the acquisition of HKFS and the acquisition of 1st Global. The impairment of goodwill relates to the impairment of our Wealth Management reporting unit goodwill in the first quarter of 2020. The impairment of an intangible asset relates to the impairment of the HD Vest trade name intangible asset in the third quarter of 2019. Executive transition costs relate to the departure of certain company executives in the first quarter of 2020. Headquarters relocation costs relate to the process of moving from our former Dallas and Irving offices to our new headquarters.

We believe that Adjusted EBITDA provides meaningful supplemental information regarding our performance. We use this non-GAAP financial measure for internal management and compensation purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. We believe that Adjusted EBITDA is a common measure used by investors and analysts to evaluate our performance, that it provides a more complete understanding of the results of operations and trends affecting our business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Items excluded from Adjusted EBITDA are significant and necessary components to the operations of our business and, therefore, Adjusted EBITDA should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss). Other companies may calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We define non-GAAP net income as net income (loss), determined in accordance with GAAP, excluding the effects of stock-based compensation, amortization of acquired intangible assets, acquisition and integration costs, impairment of goodwill and an intangible asset, executive transition costs, headquarters relocation costs, contested proxy and other legal and consulting costs, non-capitalized debt issuance expenses, the related cash tax impact of those adjustments, and non-cash income tax (benefit) expense. We exclude the non-cash portion of income taxes because of our ability to offset a substantial portion of our cash tax liabilities by using deferred tax assets, which primarily consist of U.S. federal net operating losses. The majority of these net operating losses will either be utilized or expire between 2021 and 2024. Gain on the sale of a business relates to the disposition of SimpleTax in the third quarter of 2019 and the subsequent working capital adjustment in the third quarter of 2020. Non-capitalized debt issuance expense relates to the expense recognized as a result of the increase to our term loan.

We believe that non-GAAP net income and non-GAAP net income per share provide meaningful supplemental information to management, investors, and analysts regarding our performance and the valuation of our business by excluding items in the statement of operations that we do not consider part of our ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, we believe that non-GAAP net income and non-GAAP net income per share are common measures used by investors and analysts to evaluate our performance and the valuation of our business. Non-GAAP net income and non-GAAP net income per share should be evaluated in light of our financial results prepared in accordance with GAAP and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss) and net income (loss) per share. Other companies may calculate non-GAAP net income and non-GAAP net income per share differently, and, therefore, our non-GAAP net income and non-GAAP net income per share may not be comparable to similarly titled measures of other companies.

(2) As presented in the Blucora Consolidated Financial Results (unaudited) on page 3.

(3) For periods in which non-GAAP net income is generated, non-GAAP net income per share is calculated using diluted weighted average shares outstanding. For periods in which non-GAAP net loss is generated, non-GAAP net loss per share is calculated using basic weighted average shares outstanding.

Blucora Net Leverage Ratio


	2019			2020												2021
(in thousands except ratio, rounding differences may exist)	4Q			1Q			2Q			3Q			4Q			1Q
DEBT:
Senior secured credit facility	$	399,687		$	444,375		$	389,062		$	563,609		$	563,156		$	562,703
CASH:
Cash and cash equivalents	$	80,820		$	168,198		$	90,081		$	151,166		$	150,125		$	191,803
NET DEBT (1)	$	318,867		$	276,177		$	298,981		$	412,443		$	413,031		$	370,900

Last twelve months:
SEGMENT INCOME:
Wealth Management	$	68,292		$	79,350		$	74,102		$	70,969		$	72,195		$	68,993
Tax Software	96,249			54,730			20,021			48,330			49,621			62,756
	$	164,541		$	134,080		$	94,123		$	119,299		$	121,816		$	131,749
Unallocated corporate-level general and administrative expenses	(27,361)			(27,272)			(26,861)			(27,130)			(26,689)			(25,367)
ADJUSTED EBITDA (2)	$	137,180		$	106,808		$	67,262		$	92,169		$	95,127		$	106,382

NET LEVERAGE RATIO (2) (3)	2.3		x	2.6		x	4.4		x	4.5		x	4.3		x	3.5		x

Blucora Reconciliation of Trailing Twelve Month ("TTM") Adjusted EBITDA (2) (4)


	2019		2020								2021
(in thousands except per share amounts, rounding differences may exist)	TTM 4Q		TTM 1Q		TTM 2Q		TTM 3Q		TTM 4Q		TTM 1Q
Adjusted EBITDA
Net income (loss)	$	48,148	$	(329,516)	$	(310,907)	$	(274,727)	$	(342,755)	$	385
Stock-based compensation	16,300		12,656		12,478		12,356		10,066		16,877
Depreciation and amortization of acquired intangible assets	44,208		45,022		43,276		41,749		39,907		40,157
Other loss, net	16,915		19,092		19,262		28,619		31,304		33,052
Acquisition and integration—Excluding change in fair value of HKFS Contingent Consideration	25,763		29,648		23,289		27,806		22,785		18,906
Acquisition and integration—Change in fair value of HKFS Contingent Consideration	—		—		—		(1,000)		8,300		14,600
Executive transition costs	—		9,184		9,820		10,225		10,701		1,517
Headquarter relocation costs	—		716		1,453		1,863		1,863		1,147
Contested proxy and other legal and consulting costs	—		—		—		—		—		3,230

Income tax (benefit) expense	(65,054)		(1,519)		(52,934)		(25,347)		42,331		(23,489)
Impairment of goodwill and an intangible asset	50,900		321,525		321,525		270,625		270,625		—
Adjusted EBITDA	$	137,180	$	106,808	$	67,262	$	92,169	$	95,127	$	106,382

____________________________

(1) We define net debt, a non-GAAP financial measure, as cash and cash equivalents less the outstanding principal of debt. Management believes that the presentation of this non-GAAP financial measure provides useful information to investors because it is an important liquidity measurement that reflects our ability to service our debt.

(2) Non-GAAP measure using Adjusted EBITDA for the last twelve months. Adjusted EBITDA for the trailing twelve month period is reconciled to the nearest GAAP measure on this page.

(3) Net leverage ratio is calculated by dividing net debt by Adjusted EBITDA for the trailing twelve months.

(4) For additional information on Adjusted EBITDA and its use as a non-GAAP measure, see page 6.

Blucora Reconciliation of Operating Free Cash Flow (1)


	2019		2020										2021
(in thousands, rounding differences may exist)	FY 12/31		1Q		2Q		3Q		4Q		FY 12/31		1Q
Net cash provided by (used in) operating activities	$	92,804	$	46,864	$	(12,490)	$	940	$	8,765	$	44,079	$	53,722
Purchases of property and equipment	(10,501)		(7,715)		(11,357)		(9,639)		(7,291)		(36,002)		(8,598)
Operating free cash flow	$	82,303	$	39,149	$	(23,847)	$	(8,699)	$	1,474	$	8,077	$	45,124

____________________________

(1) We define operating free cash flow, which is a non-GAAP measure, as net cash provided by (used in) operating activities less purchases of property and equipment. We believe operating free cash flow is an important liquidity measure that reflects the cash generated by our businesses, after the purchases of property and equipment, that can then be used for, among other things, strategic acquisitions and investments in the businesses, stock repurchases, and funding ongoing operations.

Blucora Operating Metrics - Wealth Management


	2019			2020															2021
(in thousands except %s, rounding differences may exist)	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
Segment revenue	$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189		$	154,491
Less: Financial professional commission payout	$	(348,003)		$	(100,804)		$	(82,656)		$	(94,794)		$	(102,610)		$	(380,864)		$	(107,211)
Segment net revenue (1)	$	159,976		$	44,185		$	33,228		$	41,138		$	46,774		$	165,325		$	47,280
Segment income (2)	$	68,292		$	22,598		$	11,731		$	17,498		$	20,368		$	72,195		$	19,396
Segment income % of revenue	13		%	16		%	10		%	13		%	14		%	13		%	13		%
Segment income % of net revenue	43		%	51		%	35		%	43		%	44		%	44		%	41		%


(in thousands except %s, rounding differences may exist)			2019			2020															2021
	Sources of Revenue	Primary Drivers	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
Financial professional-driven	Advisory	- Advisory asset levels	$	252,367		$	78,757		$	66,303		$	82,612		$	87,079		$	314,751		$	91,119
	Commission	- Transactions - Asset levels - Product mix	191,050			50,580			39,836			44,921			49,864			185,201			52,534
Other revenue	Asset-based	- Cash balances - Interest rates - Number of accounts - Client asset levels	48,182			10,579			3,981			4,351			4,777			23,688			5,329
	Transaction and fee	- Account activity - Number of clients - Number of financial professionals - Number of accounts	16,380			5,073			5,764			4,048			7,664			22,549			5,509
	Total revenue		$	507,979		$	144,989		$	115,884		$	135,932		$	149,384		$	546,189		$	154,491
	Total recurring revenue (3)		$	422,128		$	119,255		$	100,004		$	117,822		$	127,863		$	464,944		$	130,755
	Recurring revenue rate (3)		83.1		%	82.3		%	86.3		%	86.7		%	85.6		%	85.1		%	84.6		%

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(1) Non-GAAP financial measure represents segment revenue less financial professional commission payout.

(2) Excludes expenses associated with non-recurring projects.

(3) Recurring revenue consists of trailing commissions, advisory fees, fees from cash sweep programs, and certain transaction and fee revenue.

Blucora Operating Metrics - Wealth Management (continued)


(in thousands except %s and as otherwise indicated, rounding differences may exist)	2019			2020															2021
	FY 12/31			1Q			2Q			3Q			4Q			FY 12/31			1Q
Total client assets	$	70,644,385		$	61,014,454		$	68,519,998		$	76,152,721		$	82,961,244		$	82,961,244		$	84,776,191
Brokerage assets	$	43,015,221		$	37,395,490		$	41,964,610		$	43,733,735		$	47,357,687		$	47,357,687		$	48,001,320
Advisory assets	$	27,629,164		$	23,618,964		$	26,555,388		$	32,418,986		$	35,603,557		$	35,603,557		$	36,774,871
% of total client assets	39.1		%	38.7		%	38.8		%	42.6		%	42.9		%	42.9		%	43.4		%
Number of financial professionals (in ones) (1)	3,984			3,945			3,862			3,975			3,770			3,770			3,718
Advisory and commission revenue per financial professional (2)	$	111.3		$	32.8		$	27.5		$	32.1		$	36.3		$	111.3		$	38.6

Quarterly production retention rate: (3)
Financial professional-driven revenue (4)	$	443,417		$	495,837		$	492,498		$	491,829		$	499,952		$	499,952		$	514,268
Financial professional-driven revenue related to independent financial professionals who departed in the quarter (4)	$	10,770		$	4,586		$	11,445		$	5,366		$	19,101		$	19,101		$	8,127
Financial professional-driven revenue, less that related to independent financial professionals who departed in the quarter (4)	$	432,647		$	491,251		$	481,053		$	486,463		$	480,851		$	480,851		$	506,141
Quarterly production retention rate (3)	97.6		%	99.1		%	97.7		%	98.9		%	96.2		%	96.2		%	98.4		%

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(1) The increase in financial professionals in the third quarter of 2020 resulted from the addition of 19 in-house financial professionals (licensed financial planning consultants, which are employees of HKFS) and 131 licensed referring representatives at CPA firms that partner with HKFS.

(2) Full year advisory and commission revenue per financial professional is based upon a full year of advisory and commission revenue.

(3) Quarterly production retention rate is a newly-disclosed business metric and non-GAAP financial measure. We believe quarterly production retention rate is an important measure of our quarterly retention of financial professional-driven revenue (which consists of advisory revenue and commission revenue). Management uses quarterly production retention rate to measure the impact of financial professional departures on our business. Quarterly production retention rate is calculated by subtracting (a) financial professional-driven revenue for the trailing-twelve-month period then ended related to independent financial professionals that departed in the quarter from (b) total financial professional-driven revenue for the trailing-twelve-month period then ended, and then dividing the difference by (c) total financial professional-driven revenue for the trailing-twelve-month period then ended. As quarterly production retention rate is a measure of retention during a quarter, it also includes quarterly production from independent financial professionals who departed in prior quarters in the trailing-twelve-month period, and therefore does not show production retention rate over longer periods of time.

(4) For the trailing-twelve-month period then ended.

Avantax (AVTA) 8-KBlucora Announces First Quarter 2021 Results